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Chinese Overseas M&A Performance and the go Global Policy




This paper investigates whether stock markets view Chinese OMAs as increasing shareholder wealth. The subject is of interest given the influential role that the government plays in Chinese firms’ overseas activities, and the fact that the government may have objectives other than maximization of shareholder wealth. We examine 145 OMAs by Chinese acquiring firms over the year 1994-2008. We find some evidence that markets positively responded to news of Chinese OMAs. However, we also find that markets responded less favorably after China implemented its Go Global policy encouraging overseas investment. We hypothesize two reasons for this: First, the expansion of OMAs under Go Global resulted in Chinese firms pursuing less attractive targets, on average. Second, Go Global re-directed investment towards industries having national strategic value but diminished profit value. Using a Blinder-Oaxaca decomposition procedure, we find no evidence to support this latter hypothesis. Thus, to whatever extent strategic interests may motivate China’s Go Global policy, it does not appear that their pursuit has come at the expense of shareholder wealth.

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  • Lulu Gu & W. Robert Reed, 2010. "Chinese Overseas M&A Performance and the go Global Policy," Working Papers in Economics 10/25, University of Canterbury, Department of Economics and Finance.
  • Handle: RePEc:cbt:econwp:10/25

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    Cited by:

    1. Gambhir, Ajay & Schulz, Niels & Napp, Tamaryn & Tong, Danlu & Munuera, Luis & Faist, Mark & Riahi, Keywan, 2013. "A hybrid modelling approach to develop scenarios for China's carbon dioxide emissions to 2050," Energy Policy, Elsevier, vol. 59(C), pages 614-632.
    2. Nan Hu & Yun (Ivy) Zhang & Songtao Tan, 2016. "Determinants of Chinese Cross-Border M&As," Annals of Economics and Finance, Society for AEF, vol. 17(1), pages 209-233, May.
    3. Cozza, C. & Rabellotti, R. & Sanfilippo, M., 2015. "The impact of outward FDI on the performance of Chinese firms," China Economic Review, Elsevier, vol. 36(C), pages 42-57.

    More about this item


    Economic Development; China Economy; Overseas Mergers and Acquisitions; Event Study; Go Global;

    JEL classification:

    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

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